USDA-Rural Development
Position 2
RD-MN 3575-A, Guide 2 (Rev. 1/06)
CONDITIONAL COMMITMENT FOR GUARANTEE, FORM 449-14 EXHIBIT A
Lender: Borrower: Loan Amount: $
Percent Guaranteed: 90%
COMMITMENT DEFINITIONS: “Lender” “Borrower” “RHS” - USDA, Rural Development, Rural Housing Service USE AND SOURCE OF FUNDS: Uses: Addition to Building RHS Guarantee Fee Lender Loan Fee Other Closing Costs TOTAL $ $ $ $__________ $ Sources: Lender Loan $
RATES AND TERMS: $ Years %(Variable or Fixed)
Payments will be due monthly and will vary no more often than every ____years. The principal balance should be properly amortized during the __ year maturity of the loan. Balloon payments at the end of the loan are prohibited. The rate of interest will be variable at 1% over the “Reference Rate” quoted by ____________________ (the “Index”). The Index currently is ____% per annum. The interest rate adjustments will occur in years __________. The Lender will incorporate into the note a provision for adjustment of payments coincident with an interest rate adjustment. Any change in the interest rate between the date of the issuance of the Conditional Commitment and the Loan Note Guarantee must be approve by RHS as an amendment to the Conditional Commitment.
COLLATERAL AND LIEN POSITION: The Lender is responsible for obtaining and maintaining proper and adequate security to protect the interest of the Lender and the RHS. A ________ lien will be obtained on the properties owned by the Borrower and known as________________________________________. An Assignment of Rents will be secured for the above properties. A UCC-2 Fixture Financing Statement on all fixtures. The Lender will determine that the Borrower has good and marketable title to all security. APPRAISAL: The Lender will require that appraisals be conducted in accordance with generally accepted appraisal standards as reflected in the “Uniform Standards of Professional Appraisal Practices” (USPAP) as promulgated by the Appraisal Standards Board of the Appraisal Foundation. INSURANCE AND BONDING: The Lender will provide evidence that the Borrower has adequate insurance and fidelity bond coverage by loan closing or the start of construction, whichever occurs first. Lenders are responsible for determining the type and amounts of insurance required and ensuring coverage is maintained for the life of the loan. Insurance coverage is subject to RHS review and approval. FINANCIAL REPORTING: The Lender will obtain and forward to RHS an annual audited financial statement (audited by an independent CPA). The Lender will provide RHS with a written review of the Borrower’s year end financial statements, including the Lender’s analysis of strengths, trends, weaknesses and other indications of the financial condition of the Borrower within 120 days of the end of the Borrower’s fiscal year EQUAL OPPORTUNITY AND NONDISCRIMINATION: The Lender will comply with the requirements of Title V of the Equal Credit Opportunity Act. The Lender and Borrower are responsible for ensuring the contractor’s compliance with Executive Order 11246, “Equal Employment Opportunity”. RHS Forms 400-1 and 400-6 may be used to meet this requirement. AMERICANS WITH DISABILITIES ACT: The Lender and Borrower are responsible for compliance with the Americans with Disabilities Act on applicable projects.
DESIGN AND CONSTRUCTION: The Borrower and Lender will authorize design and plans based upon preliminary architectural and engineering reports or plans approved by the Lender and concurred in by the RHS. The RHS review will be limited to ensuring the project is modest in design and construction. The project must conform to applicable Federal, State and local code and requirements. The Lender will monitor the project to ensure that construction proceeds in accordance with the approved plans and specifications. Any problems should be expeditiously reported to the RHS. INSPECTIONS: The Lender will notify the Agency of any scheduled field inspections during construction and after issuance of the Loan Note Guarantee. The RHS may attend such inspections. Any inspections or review conducted by the RHS, including those with the Lender, are for the benefit of the RHS only and not for the benefit of the other parties of interest. RHS inspections do not relieve the borrower or the Lender of their responsibilities to conduct necessary inspections. USDA - RHS INSTRUCTIONS: The Lender acknowledges receipt of a copy of Instructions 3575-A which apply to RHS Loan Guarantees. LOAN AGREEMENT: The Loan Agreement between the Lender and the Borrower must contain a condition similar to the following: If the corporation dissolves or ceases to perform the community facility objectives and functions, the board of directors shall distribute all business property and assets to one or more nonprofit corporations or public bodies. This distribution must be approved by 75% of the users or members and must serve the public welfare of the community, stockholders or others having financial or managerial interest in the corporation. Nothing herein shall prohibit the corporation from paying its debts. Any changes in the Loan Agreement between the Lender and the Borrower require the prior written concurrence of RHS. LENDER CERTIFICATIONS: Prior to RHS’s execution of the Loan Note Guarantee, the Lender must certify that the provisions of Instruction 3575-A, 3575.63 have been met.
SERVICING: The Lender is responsible for servicing the entire loan in accordance with the Lender’s Agreement and taking all servicing actions that a prudent lender would perform on a portfolio of loans not guaranteed.. The Lender must notify the RHS of any violation of the Loan Agreement with the Borrower within 30 days of such violation. RHS GUARANTEE: __% of the $________ loan ($_________) will be covered by the RHS guarantee. The Lender may market the guarantee portion of the loan, maintaining a minimum of 5% of the unguaranteed loan portion for the term of the loan. The retained amount cannot be participated to another lender. The Lender will not take separate security to secure only the unguaranteed portion of the loan. The Lender will not require compensating balances or certificates of deposit as a means of eliminating exposure on the unguaranteed portion of the loan. The Lender agrees to deliver a completed Guaranteed Loan Closing Report and to pay the guarantee fee which is 1% of the loan times percentage of the guarantee. This fee is to be paid to RHS on the day the Loan Note Guarantee is executed. ACCESS TO LENDER’S RECORDS: Upon request by the RHS, the Lender will permit representatives of the RHS (or other agencies of the USDA authorized by the Department or the U.S. Government) during regular business hours to inspect and make copies of any of the records of the Lender pertaining to the guaranteed loans. ENVIRONMENTAL MITIGATIVE MEASURES: